MPs on both sides of the House of Assembly vowed to stand united against the “bullying” European Union yesterday as they passed new rules designed to get tough on international business.

Curtis Dickinson, the finance minister claimed the House would back a Bill “holding their noses” as politicians from the One Bermuda Alliance joined those in the Progressive Labour Party to express their displeasure at being forced to amend the island’s laws.

Mr Dickinson said: “It is our people’s renowned hospitality to service our tourists and our people’s intellect and professionalism to service our international business clients that enables Bermuda as a country to survive.

“Some parts of the world are envious of Bermuda’s success and have now openly attacked the core of our economy, our strongest economic leg, our international business industry.

“I speak of the European Union, who are fuelled by, or use the term egged-on by, non-governmental organisations that believe that if you do not have an income tax regime, then something must be wrong with you, that if your tax regime is consumption-based instead of income-based then you must be the cause of diverting other countries’ tax revenue away from potential use to assist to feed some developing countries and care for refugees, migrants, war victims, et cetera.

“Such NGOs have clearly won this row for they have convinced policymakers in the European Union to attack all low or no-income tax jurisdictions, including Bermuda.”

Mr Dickinson was speaking as he tabled a revised version of the Economic Substance Act 2018 during a special sitting of the House of Assembly, held so legislators could beat a year-end deadline for the introduction of laws to combat companies with only a technical base offshore.

Economic substance means that companies must show a physical presence, employees and revenue-generating activities.

The Bill was tabled after The Royal Gazette revealed that the European Code of Conduct Group was understood to have rejected the original version of the Act, tabled on December 7.

Changes included the economic substance requirement which referred to “adequate expenditure incurred in Bermuda”, now changed to specify “adequate operating expenditure”.

Bermuda was one of more than 40 jurisdictions that promised to pass legislation by the end of this year to address the bloc’s concerns about tax avoidance by multinational companies.

Mr Dickinson said that despite the Organisation for Economic Co-operation and Development’s view that Bermuda was “largely compliant”, or not harmful, the EU decided that low or no-income tax jurisdictions would be branded as noncooperative unless they submitted to its economic substance requirements.

He added that the OECD planned to replace the EU economic substance regime with its own framework but that was still a “work in progress”.

Mr Dickinson said later: “I understand that many of us are holding our noses as we say ‘yes’ but Bermuda has been resilient and we’ve always managed to find a way.”

The Bill also includes provisions to monitor firms and enforcement for those who fail to comply, from fines to being struck off the register of the companies.

Patricia Gordon-Pamplin, the Opposition’s finance spokeswoman in the House, warned that some firms might consider relocation.

She said: “We have been asked to do things that other countries, larger than ours with more resources than ours, don’t have to do.”

Ms Gordon-Pamplin said there was a perceived “threat” posed by Bermuda to the stability of larger countries because of its economic success.

She added: “So they’ve come with a club and with the bullying attitude to which the minister referred, to say, ‘you will do things our way’.”

But Ms Gordon-Pamplin added: “We will still find a way to outstrip and excel because that’s what we do.”

David Burt, the Premier and the former finance minister, said some people feared the legislation indicated “the end of Bermuda”.

He added: “I want to make it very clear that I am sure that all 36 members who sit inside of this House will make sure that that is not the case.”

Mr Burt said that the Government would watch to ensure the rules are applied equally to all affected countries.

He added: “Over the next six months, we must make this regime work, this government will lead that effort and we expect to have all hands on deck to ensure that we can make a success of it.”

Wayne Furbert, the junior finance minister, said he was “optimistic” the island could benefit and said it was estimated that about 11,000 of Bermuda’s 15,000 registered companies would be affected by the legislation.

He added: “Just imagine, if half of those companies were to put boots on the ground, what impact would it have on our economy?

“First of all our GDP would rise significantly.”

• To read a copy of the revised Economic Substance Act 2018, click on the PDF under “Related Media”